The main question to be addressed in this policy brief is whether Brunei should adopt a minimum wage policy. Our premise is that a minimum wage policy is not a universal solution as it is dependent upon considerations within the national context; the cost of living, productivity, competitiveness and employment structure. It is our view that Brunei already practises some form of minimum wage policy in that there are already minimum wage levels that are imposed on each category of public employment and for foreign workers.
Should the Government decide to in addition, apply a minimum wage policy towards other sectors of employment, in particular, the private sector, then in the current context of Brunei whereby there is a lack of labour organisations and collective bargaining capacity especially for the low wage unskilled and semi skilled sector, a significant number of unemployed (including voluntary unemployment) local youths, high number of foreign workers (skilled and unskilled), low productivity rates and a growing awareness of the existence of significant poverty levels, we would argue that there is a justifiable case to do so. Tackling poverty, unemployment and lack of productivity amongst low wage workers is the pertinent target, and, the main justification.
A basic policy is proposed whereby a blanket minimum wage level, options as follows, is set, applicable to specific sectors which the Government has identified as low wage, informal and lacks bargaining power:
- Slightly above the poverty threshold of approximately BND 250, at BND300
- Comparable to the lowest salary offered in Governments which is around BND 495 per month.
- Between 30 to 50 per cent of the median income of the country, as commonly practised abroad. More research is required to calculate this option.
This study has been published as a CSPS Policy Brief in 2014.